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Domingo with respect to the Domingos survivor whole life policy),
the DeAngelises survivor whole life policy was reinstated by
MetLife to the full face value and converted retroactively to a
policy with an automatic premium loan (APL) provision.18 That
feature was then applied to pay the premiums of $103,762.66 due
on December 28, 1997 and 1998, through an APL of $207,525.32.
MetLife’s stated reason for reinstating the DeAngelises survivor
whole life policy was that the policy had lapsed because of
“company error”; specifically, MetLife stated, Dr. DeAngelis
wanted loans to be made automatically from the policy to pay the
premiums and was not advised by the broker that the policy was
set up with a nonforfeiture option of reduced paid-up insurance.
The DeAngelises survivor whole life policy lapsed again after the
nonpayment of the premium due on December 28, 1999 (the cash
value in the policy was insufficient to support an APL), and in
October 2000 was converted to participating reduced paid-up
insurance with a face value of $669,547.
18 APL provisions allow an insurance company to pay a
premium due on a policy by way of a loan taken out against the
cash value of the policy. The loan is subject to interest
charges and affects the policy’s cash value only as a potential
reduction of that value. The total amount of outstanding loans
on the policy is usually less than the policy’s cash value
because the policy will generally lapse when the total amount of
the loans exceeds that cash value.
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Last modified: March 27, 2008